The debits that don’t need your signature

Cape Town - It starts as a small monthly charge. Under the name “talk connect” or “direct debit” it looks legitimate and seems to correlate with a new cellphone contract or a rewards card.

But left unchecked, these charges snowball from R20 a month to up to R800 a week - putting the money into the account of an opportunistic fraudster.

Hundreds of people have been burnt by scammers making use of non-authenticated early debit orders, which do not require a signature to lodge charges against a card.

Just a glance through the complaints on Hello Peter - a website for consumer complaints - reveals a backlog of considerable losses.

One victim, who wanted to remain anonymous, told the Cape Argus she lost almost R4 000 when she confused the random charges on her card as part of a cellphone contract.

She only noticed when the scammers raised the monthly charge to R200 every five days.

“The bank told me these guys got hold of my debit card details and just went to town,” she said.

“I don’t know how the banks can let this happen so easily. These are charges I didn’t even sign for.”

The Payment Association of SA - which is responsible for managing and regulating the participation of banks in the payment system - has noted a marginal increase in fraud and abuse of standard and non-authenticated early debit orders.

“About 0.6 percent of debit orders are disputed by account holders and 4.6-6 percent of non-authenticated early debit orders are disputed,” said the association’s chief executive, Walter Volker.

“However, some of these disputes include reasons such as the wrong date, a wrong amount, beneficiary unknown and often just because consumers want to manage their cash flow. So not all of these disputed transactions are fraudulent.”

He said scammers making use of these systems had two ways of gaining access to account details.

“So far, there has been no proof of bank staff complicity. They (scammers) set up call centres and sell something attractive to obtain banking details at that point.

“Or they buy or steal customer lists from commercial companies such as trade unions, gyms, clubs and cellphone companies and use those to make illegal deductions,” Volker said.

The system had this loophole for abuse because the association was trying to maintain a balance between access and security.

He said a common accusation levelled at banks was that they tried to exclude non-banks from the payment system.

“We are trying to allow as many beneficiary parties access as possible without exposing the system to too much risk and disruption.”

But this did not mean clients were at the mercy of scammers. Even the victim who lost R4 000 was able to lodge a complaint with her bank and potentially have all the charges re-versed after a lengthy investigation.

Volker said account holders did have complete protection. But he added they should check their bank statements regularly and dispute debit orders or early debit orders that they had not authorised.

“If this is done within 40 days of the statement, the debit order will be reversed immediately.

“After 40 days, the beneficiary party is given 30 days to prove that a mandate exists,” he said.

“If they are unable to do so, the debit order will be reversed automatically and the beneficiary party will be investigated.”